Skating to where the puck will be...

October 29, 2007

Pimco's Bill Gross points to the inability of traditional financial controls to exercise any meaningful influence on the alternative "shadow" banking system -- composed of market-based derivatives. The net result is that the Fed will need to pull out the stops, and even that might not be enough:

An increasingly recessionary looking U.S. economy will likely require 1% real short rates and 3½% Fed Funds in order to stabilize a potential growth contraction in lending not witnessed since the early 1970s or, to be honest, Roosevelt’s depressionary 1930s.

Yet another example of instability that was intentionally introduced into the global system to improve performance. Unfortunately, there aren't any control systems big enough or fast enough to compensate for behavior that exceeds acceptable boundaries -- as we are seeing today. In physical systems this usually results in loads that exceed the tolerance of the system, things break apart, and the system crashes. It's going to be interesting to see what happens in the financial system.

October 28, 2007

Totally agree with Michael on this. In contrast to Blackwater, which has some of the highest quality people in the world working for them, the vast majority of government contractors are low end body shops that field vast hordes of unqualified people. Form this alone, I'm pretty sure the anger at Blackwater is being misdirected.

Bloomberg: Merrill last week disclosed $8.4 billion of writedowns on loans and mortgage-linked bonds, leading to the biggest quarterly loss of its 93-year history. O'Neal, 56, is facing pressure to resign as investors, angered by a 29 percent drop in the stock price this year, question his ability to police risks. Merrill directors met Oct. 26 to discuss his potential departure, the Wall Street Journal reported.

October 25, 2007

Jack Miles speculates on the oil endgame in Iraq. In a fight to turn back the clock on National Oil Companies (NOCs), the US is fighting a battle that can't be won (as evidenced by the popularity/dominance of NOCs across the globe). In fact, if the central government is blocked by the US from creating a strong national oil company, the result will likely be regional oil companies that contract with Iran/China/Russia...

October 24, 2007

Just got word that the system/platform that I built (with the help of a fantastic tech team I assembled) in 2006 (HubCast) is at an important milestone. The company that is capitalizing on it has reached a level of success that will bring it much closer to the $500 million valuation it will eventually get.

In a nutshell, the system/platform makes it possible to send print orders (high-end printing and not the stuff you do with a PC printer) to global production locations, get it printed with exacting quality, and then deliver it to a local customer. In essence, it is the first step on a long journey towards Just-in-Time-and-Place (JITP) manufacturing. NOTE: this system is going to be a big winner in a world with costly liquid fuels.

October 23, 2007

Reuters. RTUK, the state body that oversees television and radio in Turkey, said the ban was necessary because broadcasting news about the deaths "hurts the psychology of society and public order and creates an image of the security forces as weak".

October 19, 2007

The dollar still has a long way to drop given the current massive trade imbalances. However, in this instance, we won't see nearly as much improvement in the trade flows as we have seen in past devaluations.

Combine this devaluation with flat oil production (in large part due to an inability to get Iraq, the only large and relatively underutilized producer left, online) and increasing demand from rapid industrialization in China, and the overall trend in oil prices seems inexorable for some time to come.